"What we are seeing is the result of the European Union not being able to handle the migration crisis in the way that they should," said Camino Mortera-Martinez, a research fellow at the Centre for European Reform.

"Rising wages are a resolutely positive thing," said Simon Tilford, deputy director of the CER. "But we will need to see several more years of reasonably strong German wage growth in order to have a meaningful impact on the imbalances in the German economy."

Camino Mortera from the Centre for European Reform told us: "There is a sense of people getting scared about what is happening in Greece happening in Spain as well. People see the banks closing and they think that Podemos will do the same in Spain."